ACPA Quarter 1 2019

Concrete Pavement Progress www.acpa.org 28 need not include a contingency element in their bids. Reliance is affirmatively desired by the Government, for if bidders feel they cannot rely, they will revert to the practice of increasing their bids. The purpose of the changed conditions clause is thus to take at least some of the gamble on subsurface conditions out of bidding. Bidders need not weigh the cost and ease of making their own borings against the risk of encountering an adverse subsurface, and they need not consider how large a contingency should be added to the bid to cover the risk. They will have no windfalls and no disasters. The Government benefits from more accurate bid- ding, without inflation for risks which may not eventuate. It pays for difficult subsurface work only when it is encountered and was not indicated in the logs. All this is long-standing, deliberately de- signed procurement policy, expressed in the standard mandatory changed conditions clause and enforced by the courts and the administrative authorities on many occasions. PT& L Const. v. Dept. of Transportation, 108 N.J. 539, 531 A.2d 1330 (1987), quoting, Foster Constr. C.A. & Williams Bros. Co. v. U.S., 193 Ct. Cl. 587, 435 F.2d 873, 887 (1970). C. Non-Enforcement of Site Condition Disclaimer Clauses is also both Fair and Just There are also two additional reasons why non-enforcement of site conditions disclaimer clauses is both fair and just. First, there can be little question that both the owner and engineer believe the soil borings accurately reflect the subsurface conditions which will be encountered. For most projects, soil borings are performed at the owner and/or engineer’s request to help design the project. Alternatively or in addition, the engineer relies upon soil borings from another project or the original project to design the project. Either way, the engineer is designing the project on the basis that the soil borings will accurately reflect the subsurface conditions throughout the project area. Since it is standard practice for engineers to rely upon the accuracy of soil borings when designing the project, why is it any less appropriate for contractors to rely upon the same accuracy when bidding the project. Second, if an owner is required to pay for the extra costs incurred when a contractor encounters subsurface conditions different than indicated in the soil borings, the owner is paying no more than it should have. Contrac- tors prepare bids on the basis of the subsurface conditions which the soil borings indicate. Contractors do not include contingencies in their bids for subsurface conditions different than what the borings indicate. We know that to be true for two reasons. One, since public contracts are awarded on the basis of low bid, contractors could not submit the low bid if they included such a contingency. Two, contractors would have no idea how much to include for a contingency. Contractors could not do so without knowledge on what kind of different conditions would be encountered, of what quantity, and where. Since contractors could never know how unanticipated subsurface conditions might affect their work, the reality is contractors could not and do not include a contingency in their bids for differing site conditions. As such, when contractors encounter differing site conditions, unless they are paid for the related extra costs, it comes right out of the contractor’s pockets. That is not fair. The owner should pay for these costs. The owner is only paying for what the project should have cost. Put another way, if the contractor knew at bid time that it would encounter the subsurface conditions actually encountered versus the anticipated conditions indicated by the soil borings, the contractor would have bid the project to include the extra costs. As such, the owner pays knowmore than what it should cost on the basis of the actual subsurface conditions. D. Conclusion Engineers rely upon soil borings when they design the project to accurately reflect the subsurface conditions. Contractors place the same reliance on the borings when they bid the project. When the subsurface conditions prove to be different than what the borings indicate, the owner should pay for the related extra costs. Had the borings accurately reflected the conditions actually encountered, the extra costs incurred by the contractor would have been part of its original bid. The owner is consequently not paying more than what it should for the project. That is the conclusion which many courts throughout the country have reached notwithstand- ing the presence of contract disclaimers which would otherwise make the contractor pay. Next time an Engineer denies a differing site condition claim on the basis of contract disclaimers related to soil borings, don’t be discouraged. Contact a construction law attorney and find out how the courts in your jurisdiction view the above disclaimers. * This article is published by Olson Construction Law, P.C. as a service to clients and contractors. The information contained herein is not intended to be relied upon as legal advice, as a solicitation to provide legal services, or in any manner to form an attorney-client relationship. Readers should consult with an attorney about specific project questions and other legal matters. Copyright © 2019 by Olson Construction Law, P.C. About the authors: Thomas Olson is the founding partner of Olson Construction Law. Tom’s commitment is to provide guidance on how to resolve issues on the jobsite, not in the courtroom. Tom has worked on highway heavy projects throughout much of the United States for more than thirty years. A prolific speaker and writer as well as attorney, his expertise is in concrete and asphalt paving, utility, earthwork and bridge construction, schedule analysis, material testing, and the technical and legal obligations of both engineers and contractors. Rielly Lund is a committed advocate for contractors, with the ability to quickly and accurately analyze a client’s issue within the parameters of each specific contract. Rielly works with contractors through all stages of construction, from bidding to acceptance, with the goal of minimizing risk and maximizing profits for contractors. With this in mind, Rielly enjoys discussing various contractual requirements with contractors before issues arise, so they are best able to meet any challenges head on. Rielly J. Lund, Esq. Thomas R. Olson, Esq. » continued from page 26 A B O U T T H E L A W